RBI imposes penalty on Karnataka State Co-operative Apex Bank

RBI’s action is based on deficiencies in regulatory compliances highlighted by the National Bank for Agriculture and Rural Development (NABARD)

The Reserve Bank of India (RBI) said on Monday it has imposed monetary penalty on The Karnataka State Co-operative Apex Bank Ltd for non-compliance with know your customer (KYC) norms.

The central bank has imposed a penalty of Rs 23.23 lakh on the Bengaluru-based lender. An order in this regard was issued on April 11.

The RBI’s action is based on the deficiencies in regulatory compliances highlighted by the National Bank for Agriculture and Rural Development (NABARD) following a statutory inspection conducted in March 2020.

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In its inspection report, NABARD noted that during the financial year 2019-20, The Karnataka State Co-operative Apex Bank did not (i) undertake risk categorisation of customers; (ii) put in to use any robust software as a part of effective identification and reporting of suspicious transactions; and (iii) submit data to all the four CICs regularly (at monthly or shorter intervals).

“In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the statutory directions, as stated therein,” the RBI said in a statement.

“After considering the bank’s reply to the notice, its additional submissions and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty,” it added.